Measuring performance is an essential function in business management. Business owners must have quantitative or qualitative analysis procedures to review their companies operations. Quantitative analysis uses mathematical calculations to measure performance output. Qualitative analysis allows business owners to make personal judgments or inferences from business information. Employee performance is a key cog of a company&rsquo;s success. Employees usually represent the largest expense for a company, and measuring performance is essential to the employee management process.
Business owners usually measure employee performance by assessing the production output of each employee. Employee output represents the amount of goods or services an employee can produce in a specific amount of time. Employee performance can also relate to how efficiently a company uses economic resources. Economic resources include the direct materials and facilities needed to produce individual products. Poor employee performance can result in wasted resources and higher business operating costs.
Small businesses usually have a formal employee review process in their performance management system. This formal process evaluates employees on their individual skills, knowledge of business operations, timeliness, teamwork ability and other similar features. Business owners often keep this information in the employee&rsquo;s file so the company has a historical record of employee performance. Business owners can compare the employee&rsquo;s current performance against previous years to determine if the employee is improving.
Poor employee performance can decrease a company&rsquo;s competitive advantage in the business environment. A competitive advantage is when one company can produce goods or services more efficiently and effectively than another business. Small businesses usually rely on employees to present a positive image of the company in the economic marketplace. Employees often represent the company in customer service functions, such as cashiers, receptionists, customer service agents and other similar positions.
Business technology can help small business owners improve their employee&rsquo;s performance. Business software can automate traditional manual processes and eliminate data entry errors in certain functions. Technology can also increase the production output for employees working in specific departments. For example, accounting clerks can often process more bills or invoices using accounting software. Rather than spending copious amounts of time using paper ledgers or journals to record this information, clerks enter the invoice information into the accounting software for processing.
Individual employees may not be solely responsible for poor performance. Business owners using a strict management system can create a difficult work environment. Business owners may require employees to get approval before making decisions in their job. This can slow down the company&rsquo;s production process and hinder the employee from achieving maximum performance. Poorly trained employees can also decrease the company&rsquo;s overall business performance.
- &ldquo;Principles of Management&rdquo;; Tony Morden; 2004